Last night Andreessen Horowitz, the same venture capital firm that invested in Facebook and Twitter, announced a $50 million investment in BuzzFeed that presumes the value of the company to be $850 million. General partner Chris Dixon compared BuzzFeed to Tesla, Uber, and Netflix because of its deep emphasis on technology and "world-class systems for analytics, advertising, and content management."
Dixon, an early investor in BuzzFeed formerly based in New York, will be joining the company's board. But this round of funding is another sign of technocrats' sudden interest in the aforementioned "content." Where Jeff Bezos buying The Washington Post could be chalked up to vanity and Pierre Omidyar's First Look seems like a form of charity (for investigative journalists), Andreessen Horowitz seems to think there's money to be made from BuzzFeed. And I believe them!
BuzzFeed CEO Jonah Peretti was a cofounder in the Huffington Post. Just as HuffPo used a savvy SEO strategy, aggregation, and content farming to dominate the distribution channel at the time (online searches), so has BuzzFeed honed a formula to dominate the new distribution channels: social networks and social media. Editor-in-chief Ben Smith came straight out and said they started a business vertical to make content to be shared on LinkedIn. All social networks are being optimized, reports The New York Times:
The photo-sharing site Pinterest, in particular, now drives more traffic to BuzzFeed's Life section than Twitter does, Mr. Peretti said. Social media accounts for 75 percent of BuzzFeed's referral traffic, according to the company.
Many of today's great media companies were built on top of emerging technologies. Examples include Time Inc. which was built on color printing, CBS which was built on radio, and Viacom which was built on cable TV. We're presently in the midst of a major technological shift in which, increasingly, news and entertainment are being distributed on social networks and consumed on mobile devices. We believe BuzzFeed will emerge from this period as a preeminent media company.
BuzzFeed started out focusing on lightweight content like memes, lists, funny photos, etc. This led some industry observers to dismiss Buzzfeed as a "toy". The company has since moved steadily up market, following the typical path of disruptive technologies. It now has an editorial staff of over 200 people covering a wide range of topics – politics, sports, business, entertainment, travel, etc – and plans to invest significantly more in high-quality content in the coming years.
But this upmarket strategy towards "high-quality content" is disingenuous. Not because BuzzFeed isn't investing in high caliber reporters producing some fantastic work, but because that work is for prestige, not for BuzzFeed's real business, which, as Dixon mentions "reaches over 150M people per month, is consistently profitable, and will generate triple digit millions in revenues this year." Thus there is little incentive to make sure that work is seen.
To keep up, sites must either perpetually increase traffic at a steady clip, or innovate and move into new and potentially more lucrative areas like so-called native advertising and video.
Already, most of BuzzFeed's revenue is derived from BuzzFeed Creative, the company's 75-person unit dedicated to creating for brands custom video and list-style advertising content that looks similar to its own editorial content.
In the Times, Dixon pushed the idea that BuzzFeed is more of a tech company than a media company. But former journalist and investor Om Malik told me there's a more pertinent distinction: "It is not a content company—it is an attention company."
And high quality stories about the chaos in Iraq are just not attention-grabbers, which might be why BuzzFeed has not yet shared the main article on its homepage (featured while all eyes are on its latest financing) with the 3.3 million readers who "liked" BuzzFeed on Facebook. This media reality created by Facebook, of course, is lost on some of its architects.
This balance of prestige and pageviews is something all advertising-dependent news organizations, like Gawker, are dealing with. There is even a new name for this show pony of respectability: "longform"—a category that says "Look, we're serious, we still speak truth to power." BuzzFeed's investors, however, have a very dim view of critical journalism.
Just before the funding news broke, Marc Andreessen whipped up one of his trademark "tweetstorms," arguing that Watergate coverage ruined news. Keep in mind that Andreessen also named Search Engine Land, a blog about the business of Internet searches, as one of 10 media properties to watch and replicate. Search Engine Land. Personally I find it pretty useful, but it's obvious Andreessen didn't look up from his tech news feeds before pontificating on the future of the entire industry.
Andreessen stormed his way onto something: we are going through a debilitating existential crisis. Back in February, Andreessen laid out the cure. The news industry is going to "grow 10X to 100X from where it is today," he promised, if we follow his plan:
One start would be to tear down, or at least modify the "Chinese wall" between content and the business side. No other non-monopoly industry lets product creators off the hook on how the business works.
Before the journalistic purists burst a fountain pen, consider that there are intermediate points between "holier than holy" and "hopelessly corrupt" when it comes to editorial content.
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[Image via Getty]